Retrophin's (NASDAQ:RTRX) shares were jumping premarket after the U.S. FDA approved its Cholbam capsules to treat rare bile acid synthesis disorders caused by single enzyme defects.
The company said the treatment is an FDA-approved first for pediatric and adult patients with such disorders, and for patients with peroxisomal disorders.
On the back of the approval, Retrophin will exercise its right to buy all the worldwide rights, title and ownership of Cholbam and its related assets from Asklepion Pharmaceuticals, under a deal announced back in January.
Retrophin will pay Asklepion a one time cash fee of $27 million, as well as 661,278 shares of common stock, which was valued at $9 million at the time the agreement was signed.
Asklepion will also have the rights to up to $37 million in sales milestones payments, as well as tiered royalties based on future net sales of the drug.
Separately, the FDA also granted a "rare pediatric disease priority review voucher", which is a provision that encourages development of new drugs for the prevention and treatment of rare children's diseases.
The voucher entitles the holder to an expedited FDA review for any new drug application, and is designed to be transferable or sold. It will be transferred to Retrophin under the original terms of the deal with Asklepion.
Cholbam, because of its orphan drug designation, will have seven years of market exclusivity in the U.S. Retrophin said that there are about 30 patients currently receiving Cholbam treatment through an open label extension of clinical trials that proved its effectiveness for bile acid synthesis disorders.
Bile acid synthesis disorders are a group of rare metabolic disorders characterized by defects in the creation, or synthesis, of bile acids, which are chemical compounds found in the liver. In many cases, symptoms are present at birth or in the newborn period, but if left untreated, the more severe forms of these disorders can progress to cause life-threatening complications such as scarring of the liver and liver failure.
Bile acids have several roles in the body, including promoting the flow and excretion of bile and assisting in the intestinal absorption of fat and vitamins. These disorders are caused by mutations in specific genes, most of which are inherited as autosomal recessive traits.
According to recent stats, the estimated incidence of bile acid synthesis disorders due to single enzyme defects is 1 to 9 per million live births, while peroxisomal disorders are believed to affect about 1 in 50,000 live births.
“With FDA approval, Cholbam will be available to patients suffering from several life-threatening diseases that until now, had no approved treatment," said chief executive officer, Stephen Aselage.
"Cholbam complements Retrophin’s existing bile acid therapy, Chenodal (chenodeoxycholic acid), and will position us as the leading provider of treatments for patients with these bile acid synthesis and peroxisomal disorders."
Retrophin's focus is on rare diseases, with two approved drugs aside from Cholbam, and a pipline of compounds. The company said it expects to close the Cholbam acquisition and begin distributing the therapy in as little as two to four weeks.
Shares surged 34 percent premarket Wednesday, to $19.86. The stock closed at $14.76 in New York on Tuesday, up more than 20 percent year-to-date.